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Pastore Inc. granted options for 1 million shares of its $1 par common stock at the beginning of the current year. The exercise price is $29 per share, which was also the market value of the stock on the grant date. The fair value of the options was estimated at $8.00 per option.

If the options have a vesting period of five years, what would be the balance in "Paid-in Capital – Stock Options" three years after the grant date?

Respuesta :

jepessoa

Answer:

$4,800,000

Explanation:

The balance in the Paid-in Capital - Stock Options account will increase by $1.6 million per year: $8 x 1 million x 1/5 = $1.6 million

Since three of the five year vesting period have already passed, then the account balance should be = $1.6 million per year x 3 years = $4.8 million

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